Nearly half of UAE expats not financially prepared for retirement
Almost half of UAE expatriate employees have no plan to ensure an adequate standard of living after retirement except to work for as long as possible, a survey from global consulting company Mercer found.
The study further uncovered a lack of financial awareness among respondents with 61% reporting no long-term savings at all and 43% expecting their end of service benefits to meet their long-term financial needs.
The findings, Mercer said, indicate that there is a lack of financial awareness among professionals in the country. "With an increasing number of expats remaining in the region for longer durations and closer to retirement age, planning for retirement is becoming a more pressing issue," Tarek Zouiten, retirement business leader at Mercer UAE, said.
The time to start saving is now, because the earlier you begin, the easier it will be to reach your long-term objectives"
He noted that number of expat employees in the UAE who are not prepared financially for retirement is very concerning. "Employees must understand that the current end of service benefits are far from enough to ensure an adequate standard of living post-retirement," he added.
The UAE's current gratuity system pays employees a lump sum based on the length of employment. Employees with at least 12 months of service are entitled to 21 calendar days of their base salary for each year of service in the first five years and 30 days' base salary for each year worked beyond five years.
According to the report, only 24% confirmed access to pension or saving schemes with their current employers. Furthermore, four out of five employees perceived a lack of concern from their employers about their financial well-being, resulting in lower satisfaction and loyalty levels.
The survey also found that 99% of UAE employees expressed the need for improved savings and investment benefits, while 81% claimed they would be less likely to leave their current employer if they were offered such benefits.
Nigel Green, CEO and founder of deVere Group, which provides financial planning services, said it is important that people start saving for retirement as soon as they can, regardless where they are at in their working lives.
"The time to start saving is now, because the earlier you begin, the easier it will be to reach your long-term objectives," Green told local news outlet Zawya.
"It is never too late to start saving for your future. There is a myriad of financial solutions that help you secure financial freedom in retirement at whatever age you are," he added.
This month, the Dubai International Financial Centre became the first major entity in the UAE to replace the gratuity, rolling out its DIFC Employee Workplace Savings (DEWS) plan on February 1.
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